Learn to Invest
Introduction
What is a Stock?
How to Choose a Stock
Active Trading vs Portfolio Management
How to start testing multiple strategies
What is an ETF?
How to Choose ETFs
What is short selling?
What is a Bond?
What is an Option?
Diversification Score
What is Portfolio Management Strategy?
What is Diversification?
What is the Diversification Score?
How to Build a Basic ETF Portfolio
What are asset-classes?
What is Industry Exposure?
What is Geopolitical Exposure?
How to read impact on diversification
Sharpe Ratio
What is Volatility?
What is Return?
What is Sharpe Ratio?
How to Improve Sharpe Ratio
How do I measure risk?
What are average excess returns?
What is a good Sharpe Ratio?
Challenge Metrics
Innovating Recruitment
Recruitment Resources
Showcasing your work on EquitySim
Designing a stand-out resume
Preparing for the S+T interview
STAR Structure for Behavioural Interview Questions
Interview Prep: Tell me about yourself
Interview Prep: Pitch me an Investment Idea
Interview Practice - Partner Exercise
Interview Prep: What to wear
Why employers should work with EquitySim
2022 Financial Markets Campus Recruitment Insights
Case Study: 2019 Credit-Suisse Results
Our Simulation
Simulation Walkthrough
How-to: Company Pages
How to: Discovery
How-to: Portfolio Holdings
How to: Activity
How to: Leaderboard
How to: Performance
How to: Challenges
How to Trade
How to: use EquitySim to improve your recruitment potential
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- How do I measure performance?
How do I measure performance?
As we saw from the Stock Performance level, it is important to look at the price movements within a period, as opposed to just looking at the Total Return Rate.
A good way to characterize price movements is to analyze daily return rates (i.e., return rate from one day to the next).
Why return rate? It’s the relative gains or losses (return rates) that matter, not the absolute prices. Every security has a different price range. Return rates provide the normalization needed across different price ranges. See the Price Chart and the Return Rate Chart.
Why daily? Using the daily return rates allows us to characterize the price movement between the period rather than Total Return Rate, which measures the rate on only two points in time, beginning and the end, skipping the price movement in between.
However, when we work with daily return rates, there is one data point per day (see the Return Rate Chart). That's a lot of data points. One way to summarize daily return rates is Mean Return Rate, which is the mean (or average) all the daily return rates during the period.
Think of Mean Return Rate as the middle value.
If you were to count up how many of the daily returns rates into bins, constructing a distribution (see Distribution of Return Rates), Mean Return Rate is middle point in the distribution (see "Mean Return Rate" in the Distribution of Return Rates chart).